Purchase Applications Up in Latest MBA Survey. Refi Demand Down Again
The Mortgage Bankers Association today released its Weekly Mortgage Applications Survey for the week ending November 19th, 2010.
The MBA's loan application survey covers over 50% of all U.S.
residential mortgage loan applications taken by mortgage bankers,
commercial banks, and thrifts. The data gives economists a snapshot view
of consumer demand for mortgage loans. In a low mortgage rate
environment, a trend of increasing refinance applications implies
consumers are seeking out a lower monthly payment. If consumers are able
to reduce their monthly mortgage payment and increase disposable income
through refinancing, it can be a positive for the economy as a whole
(creates more consumer spending or allows debtors to pay down personal
liabilities like credit cards). A falling trend of purchase applications
indicates a decline in home buying demand, a negative for the housing
industry and the economy as a whole.
Excerpts from the Release...
The Market Composite Index, a measure of mortgage loan application volume, increased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1.1 percent compared with the previous week.
The Refinance Index decreased
1.0 percent from the previous week and is the lowest Refinance Index
observed since the end
of June. The four week moving average is down 4.8 percent for the Refinance Index. The refinance share of mortgage activity decreased to 78.6 percent of total applications from 80.3 percent the previous week.
The seasonally adjusted Purchase Index increased 14.4
percent from one week earlier, which included Veterans Day.
No adjustment was made for the holiday. On a seasonally
adjusted basis, this is the highest Purchase Index recorded since
the week ending May 7, 2010. The unadjusted Purchase Index
increased 9.6 percent compared with the previous week and was 7.4
percent lower than the same week one year ago. The four week moving average is up 4.0 percent for the seasonally
adjusted Purchase Index.
The average contract
interest rate for 30-year fixed-rate mortgages increased to 4.50 percent
from 4.46 percent, with points
decreasing to 0.88 from 1.12 (including the origination fee)
for 80 percent loan-to-value (LTV) ratio loans. This is the
highest 30-year fixed rate observed in the survey since the
week ending September 3, 2010. The effective rate decreased
from last week.
The average contract interest rate for 15-year fixed-rate
mortgages decreased to 3.83 percent from 3.87 percent, with points
increasing to 1.04 from 0.91 (including the origination fee)
for 80 percent LTV loans. The effective rate was unchanged from
last week.
Michael Fratantoni, MBA’s Vice President of Research and Economics said...
"The increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation. While the increase was magnified somewhat by the comparison to the holiday week, the level of purchase applications on a seasonally adjusted basis is now at its highest level since the expiration of the homebuyer tax credit."